>> the medium enters in as a condition of the art form itself. >> well, well, to me, i mean, it's all instinctive. i just try to feel it, you know. i try to get a sense of it and not think about it so much. >> just like those two in washington, they are talking but they're also posturing and posing instead of negotiating. it's gamesmanship. it's not cooperative governing but competitive dealmaking where each is merely trying to crush the other as daniel day-lewis' ruthless oil man did in "there will be blood." >> my sword reaches across the room and starts to drink your milkshake. i drink your milkshake. i drink it up! >> who will drink the other's milkshake? will they learn how to talk to each other? will they drive off the cliff? oh, there's a cheap hollywood feel to this bhol narrative,

this self-inflicted drama, and i hope no one ever, ever makes a movie about it. that does it for "the cycle." jonathan capehart is in the chair today? i feel like he's cheating on us. weren't you part of "the cycle", brother? >> i was, but it's a new day now. thanks guys. i'm jonathan capehart in for martin bashir on this december 31st, 2012. we're so very close to a deal that would stop all hell from breaking loose. oh, and happy new year. >> today it appears that an agreement to prevent this new year's tax hike is within sight. >> we're going cliffing. >> still no deal in sight. >> they just shovel it out to us. >> washington still in deadlock. >> we're falling over that fiscal cliff. >> republicans simply can't utter the word yes. >> the president is, i believe, slowing down the process. >> they have no strategy. they don't know what they want. >> kim kardashian is pregnant.

>> a lot of democrats get mad at me. >> no deal is better than a bad deal. >> something has gone terribly wrong when the biggest threat to our american economy is our american congress. >> hats off to the president. >> as of this point is looks like i'm going to be spending new year's here in d.c. i can come to your house? is that what you're saying? >> happy new year! grab your party hats, chill the bubbly. just eight hours to go. yes, we are all waiting to cue the confetti with hopes for a last-minute deal to avert the fiscal cliff. with sweeping tax hikes and spending cuts set to take effect at midnight, frantic negotiations are ongoing at this hour with the president teasing the prospect of a deal on at least part of the cliff just hours ago. >> it appears that an agreement

to prevent this new year's tax hike is within sight, but it's not done. we we're hopeful that congress can get it done, but it's not done. >> so it's not done. in case you missed that, he said it twice, not done. reports of an emerging deal focus on a few key parameters, raising tax rates on couple it's making more than $450,000 a year, increasing the estate tax rate, and extending unemployment benefits for one year. the major sticking point new appears to be sequester spending. while the president said he would prefer a grand bargain, a certain branch of government stood in the way. >> with this congress that was obviously a little too much to hope for. one thing we can count on with respect to this congress is that if there's even one second left before you have to do what you're supposed to do, they will use that last second. >> those remarks might not have

helped matters with senator john mccain taking to the floor moments later to, you guessed it, slam the president. >> as i sort out my impressions of the president's remarks as to whether to be angry or to be saddened. we have the president of the united states go over and have a cheerleading ridiculing of republicans' exercise. >> well, perhaps mccain is upset at not being in on the top flight dealmaking. lead negotiations have now fallen to vice president joe biden and senate minority leader mitch mcconnell who said an agreement is very close and said congress should act on the tax portion of the deal. >> let's pass the tax relief portion now. let's take what's been agreed to and get moving. we can do this. we must do this. >> famous last words. i want to go to the capital now. joining us, the dynamic duo, the silver fox and mr. boatshoe.

nbc's mike viqueira and luke russert. gentlemen, thanks for being here. our cnbc colleague john harwood is reporting that there will be no vote in the house tonight, and according to his sources, the u.s. will go over the fiscal cliff. what's your reaction to that? have you heard that -- >> we can confirm that. >> i love john harwood, but luke and i have been reporting the same thing, jonathan, so there. >> okay. so we're going over the cliff? >> apparently. that's the bad news. the good news is, the parameters of a deal are definitely there. as you described, jonathan, the sticking point remains this so-called trigger, the sequester. remember, they agreed upon it last summer in july and august of 2011 when they came to that big debt ceiling deal. if there were no decision on how to cut government spending by now, these draconian cuts, indiscriminate across the board to defense half of it, $500 billion in domestic programs, the other half of it, the other $500 billion would go into effect. and now some want to have that

delayed. they want to have it put off. the house of representatives, the leadership there is saying absolutely no way. there are ironies that abound all along here in these negotiations, and a lot of what you see on the surface, the president and mitch mcconnell, they're both sort of trying to set each other up here for the end game. the president comes out, he's very positive, very upbeat while he's delivering those subtle jabs to republicans. you can see the tweets coming from republican staffers and members saying, this is no way to talk to us if you want our votes. they were sort of walking into a little trap really. i mean, if you remember back during the t.a.r.p. vote when that whole thing crashed back in december of 2008, republicans said they voted against it because they were mad at a speech nancy pelosi gave and they were ridiculed in that. and we had john mccain and his ambivalence on the floor. and then we saw mitch mcconnell coming up saying, yes, mr. president, you have been bashing us for weeks, let's vote on those tax rates.

mitch mcconnell said let's do that and we'll leave the sequester aside. we'll let it kick into place. we'll tackle that whenever we get back here to washington after the inauguration and the state of the union and all that fun stuff. so that's where we stand right now. that does remain the last sticking point. >> luke, jump in here. what do you have to add that mike has already told us. >> well, mike viqueira is 12, 13 years of experience on capitol hill, so there's not much more to add after that. what i will say is i don't think that we can dismiss a lot of the anger on the republican side at the president's remarks today. i have gotten a ton of e-mails from republican aides saying the president is holding the middle class tax cuts that were agreed to hostage. i think if you take a step back, it's quite extraordinary that mitch mcconnell has agreed to $400,000 as a threshold. you think of all the partisan fights over what that number would be. but going forward, there seems to be a little anger amongst

republicans saying that the president is not realizing how much they have already handed over. they're obviously in a much stronger negotiating position at 1600 pennsylvania avenue, but we have to caution you guys, the ink is not dry on any type of deal. the house is not going to vote on it tonight. they honestly believe the deadline could go until thursday at 11:59 a.m. by which this congress would have to adjourn legally by then, constitutionally. so they think there's still some time. it's going to be a push for john boehner to get this by his members. even if it comes out of the senate with 70 or so votes, it's not a layup in the house by any means. >> right. mike viqueira, luke russert, thank you, gentlemen. >> take care. while a deal on tax rates appears to be close, the issue of spending cuts is far more contentious as the president illustrated with a few choice words today. >> if republicans think that i will finish the job of deficit reduction through spending cuts alone, and you hear that sometimes coming from them, sort

of after today we're just going to try to shove only spending cuts down -- well, shove spending -- [ laughter ] shove spending cuts at us. if they think that's the formula for how we're going to solve this thing, then they've got another thing coming. >> i wanted to bring in democratic congressman john larson of connecticut with us from capitol hill. thanks for coming in. >> happy to be here. >> i want to talk spending in a moment but, first, what's your reaction to the parameters of a tax deal, a hike on incomes more than $400,000 for individuals, $450,000 for couples. your tlauts houghts on what we o far. >> we really don't know that much. we haven't seen anything in the house of representatives. i just heard luke russert say, you know, the ink isn't dry on any agreement yet.

so while we're hopeful that there is an agreement that can be reached and have been prodding our colleagues to do so, things could implode rather easily, as we saw before here in the house of representatives when the speaker's proposal wasn't acceptable in the house of representatives. so the devil remains in the details, but we're hopeful. certainly heartened by mitch mcconnell's stewardship in the senate. we do have a bill in front of us already that we could vote on, that the senate has already bipartisanly passed at $250,000. there's a jobs bill that could be taken up that everybody agrees on. so we're somewhat confounded. people in my home state, at augie and ray's as i like to refer to, you say sequestration, they say how about jobs in they put how about getting it done so

you put the country back to work. squarely that's where we need to be in my humble he is estimatioestimatiost estimation. >> let me ask you, we were talking with mike and luke earlier reporting that there will be no vote tonight. is that what you're hearing also? >> i don't think it's physically possible but there will be votes tonight in the how many times starting at 6:00, but they will be primarily on a suspension calendar votes, et cetera, so they're not any votes of consequence. the ish irony is that's been the situation for the last several months. when we could be voting on the farm bill or could be enacting a tax cut for the american people. boehner is an honorable man and i believe him when he says that he will bring their bill. he will bring the president's

bill or the senate bill to the floor for a vote, and i think that's the responsibility of this body in the 112th congress is to step up to the plate and take a vote up or down on this issue regardless of where you stand. >> congressman, i wanted to play for you a couple dissenting opinions today from the senate. take a listen. >> sure. >> people are drowning. that's a bad thing. taxes going up is a bad thing. we're going to let 2% drown. >> no deal is better than a bad deal and this looks like a very bad deal the way this is shaping up. >> that's rand paul and tom harkin, the very opposite sides of the aisle, yet both denouncing even this potential deal. will it pass do you think? >> well, i think if you can get -- if they don't have to deal with the cloture vote and i know tom harkin has long been opposed to the cloture vote, if they just require a majority of votes to get the bill forward, i would imagine they will be able to get the bill through. that was the same provision in which they got the last tax bill

through which currently sits on the floor of the house of representatives. so this would be yet another bill different. we don't know all the contours of the bill or what it contains, but it would be different, but we would have the opportunity to in the house to vote on two different options. obviously, we favor the president's option. >> right. congressman john larson, thank you very much. >> yke you're welcome. stay with us. much more ahead as we continue the countdown to 2013. >> i know it was you. you broke my heart.

president's option.

just a few hours ago president obama seemed to draw a line in the sand on the fiscal

cliff negotiations. take a listen. >> flt we'if we're going to be about deficit reduction and debt reduction it's going to have to be a matter of shared sacrifice at least as long as i'm president and i'm going to be president for the next four years i hope. [ cheers and applause ] >> joining us now, julian epstein, a democratic strategist and dr. james peterson, an associate professor at lehigh university and a contributor to thegrio.com. welcome, both of you. julian, when you hear the president talk like that, do you get the sense that the white house believes it will not be blamed if no deal materializes and also now we hear the house is going to take a pass on a vote today. >> yeah, i think the house will likely vote tomorrow or the next day, so that won't matter so much. i think all the polling shows that the public was blaming and would blame the republicans if we had an economic calamity that resulted from not having a deal,

and i think as to the president's performance today, i think it is important not to gloat, but it is also important to remember that everyone thought this was going to be a kabuki dance up to the finish and it ended up being more of a judo flip. the president essentially got everything he wanted on tax policy, not just on rates but the credits for energy and education, the amt fix, the doc fix, and the republicans got very little if anything they wanted on the spending. a lot of democrats are miffed the president didn't take off the debt ceiling renegotiation in six weeks but i think the republicans are going to have a very, very hard part on what will be chapter two of this negotiation because they trial ran the medicare voucher proposal they had, and that went over very, very poorly during the election and they don't like defense cuts that are in the sequestration right now, so it's hard for me to know where the republicans really go in stage two of this on the spedding cuts. so i think the president has done very well for himself. >> dr. peterson, what's your sense of the president's speech

today? it almost sounded like the president was daring house republicans to cross him. >> i think the president's tone today does reflect what julian said, which is that 11% approval rating, the idea it looks like the house will be holding the ball at the end of the day so they will sort of get some of the blame for the fiscal cliff ascribed to them. i'm hearing some people critique the president on him -- either this gloating tone or him sort of showing his hand a little bit too much here in the ninth hour up to these talks but i'm not sure. these are the same folk that want this president to be more aggressive, who want him to sort of gloat a little more and be more assertive in his interactions in terms of these negotiations. i'm not sure what folk want to see out of president obama but clearly if you're talking about who is going to end up being -- looking better at the end of these negotiations, it looks like the president is well on his way to that position. >> let's turn to the gun control debate, julian. something the president told david gregory on "meet the press" this weekend. take a listen.

>> should we have an armed guard at every skol. then ra told me that could work. >> i'm not going to prejudge the recommendations given to me. i am skeptical that the only answer is putting more guns in schools. >> so, julian, does the fiscal cliff battle give you any faith that we can have a rational debate on anything as divisive as gun control? >> well, i think it depends, and i think what the president was saying was, one, that the nra's arguments on self-defense, the need for more gun prosecutions are not credible. and second, that he can't do this on his own. if we're going to have serious change on gun policy, we need to have a national movement akin to the national movement to change public opinion on the iraq war. congress should bring the victims of newtown up to capitol hill who would be willing to call for serious changes in gun policy. i think shows like this show have to focus on the fact we have a new toub that occurs in this country every single day. 30 americans on average are

killed every day from handgun violence. i think we need massive protests against irresponsible retailers like walmart who sell assault weapons and make them available to anyone -- pretty much anybody that asks. the question is not whether or not we'll have change. the question is whether or not progressives, independents and fair-minded republicans will form a national based movement that will really expose the need for this. one place we might start is asking congress if they believe in the self-defense argue am, why don't they allow guns in congress? >> the thing is polls are mixed on gun control. a majority favors stronger gun control, but a majority also says we shouldn't ban assault weapons. so how does the president frame his case to voters so they support him? >> i think, first, he's got to do like what he did with david gregory is subtly acknowledge the fact the discourse is moving in wrong guards. if we're talking about arming teachers, that's the wrong conversation to be having in the wake of newtown and aurora and

the other incidences over the last six owe eight months. we need to sort of reorder and redirect the conversation. the president tried to do a little bit of that here but at the end of the day, if we're talking about armed guards and arming teachers, we're not talking about common sense gun safety. that's the conversation we have to have going forward. we have to have victims' families and survivors coming into congress. we have to have moments and people protesting. but we also need a congress that's actually connected to its constituency on these matters and language and discourse matters here. part of the reason that assault weapons ban poll doesn't get the support of the majority of the americans is because the nra has been very, very effective at suggesting that an assault weapons ban is a slippery slope. we need that kind of powerful discourse to counter what the nra is doing and we also need lobbyist groups and other special interest groups to step up. with need a lot of folk to be involved in what needs to happen in this country with respect to gun control. >> and -- >> totally agree with that. >> go ahead. >> the nra counts on shows like

this show eventually using interest. you see -- shows like this have a major responsibility to focus on the carnage that occurs on our streets. look what's happening with the kids in chicago. >> one thing to keep in mind is that this conversation isn't going away because, you know, the president formed a task force. vice president biden is in charge of that task force. they've been given a deadline of january to present ideas to the president. the president gives his state of the union address in early february. and then it's off to the races and trying to get something done. so the idea that the president isn't going to push hard on doing something about gun safety, gun control, however you want to talk about it i think is a little bit ludicrous. julian and james, thanks very much. >> thank you. >> happy new year. >> stay with us. much more ahead.

>> many new year. >> happy new year. in this country we say happy new year. >> ha, ha, ha, ha! safety, gun control, however you in this country we say happy new

safety, gun control, however you in this country we say happy new

stay with us. the day's "top lines" are coming up. ♪ i heard somebody say ♪ burn, baby burn ♪ disco inferno ♪ burn, baby burn

fireworks and old friends, champagne toasts and resolutions. oh, and that dreaded fiscal cliff. here are today's "top lines." countdown to sky fall.

>> the last thing you want to hear on new year's eve is another speech from me. >> the thought of not kissing somebody is just -- >> an agreement to prevent this new year's tax hike is within sight. >> we're going to come in at 11:00 a.m. we'll have further announcement perhaps. >> it looks like i'm going to be spending new year's here. >> what's happening in walk right now is pathetic. >> had the republicans been willing to take the deal i gave them. >> they have had a brain freeze. >> with this congress that was obviously a little too much to hope for. >> the biggest threat to our american economy is our american congress. >> whatever happens today is really inconsequential. >> we want to starve the beast. well, guess what? starve the beast doesn't work. >> hats off to the president. he stood his ground. >> i have been doing a lot of thinking and i love you. >> how do you expect me to respond to this. >> the pressure is on congress to produce. >> i pledge to call to the vice president. >> i have had a number of conversations with the vice president. >> i know it's new year's eve. i know you're feeling lonely, but you just can't show up here, tell me you love me. >> it's been very hard for speaker boehner and republican

leader mcconnell. >> talking to a 5-year-old saying, look, you have to eat your vegetables. >> the democrats don't have a grover norquist. >> group of people in the house of representatives slapped around their own leader. >> there's a word called compromise. >> it doesn't work this way. >> how does it work? >> basic fairness. >> i love that you are the last person i want to talk to before i go to sleep at night. >> a lot of democrats get mad at me. >> i am cautiously optimistic. >> the vice president and i worked together on solutions before. we can again. >> you say things like that and you make it impossible for me to hate you. >> but the american people elected me to put forward a balanced approach. >> my whole life i don't know what this song means. it means should old acquaintance be forgot. >> i want to wish everybody a happy new year. >> let's bring in the new year with our panel, jimmy williams and susan del percio and angela, general counsel for the congressional black caucus. welcome all of you. jimmy, let's start with the

fiscal cliff. >> fiscal cliff. >> we're hearing about a strange marriage between minority leader mitch mcconnell and the vice president. why is the senate's top republican having to go to the white house for help with democrats? >> well, i mean, they have been running around saying we want the president to lead, we need the president to show leadership. john mccain just went to the show and said the president needs to show leadership. does he think the vice president's office somehow got moved away from the executive branch? i'm pretty sure the president via his vice president is leading. if that's the case, it sounds to me like they don't like what he's leading with. >> you said via. he hasn't built the relationships with members of his own party or the other party. so, yes, it makes sense that vice president biden is brought in because he still has relationships with people on the hill. >> but, susan, another issue here, and that is mcconnell having to go to biden because he's learned he can't depend on boehner to help him. >> well, i think --

>> no? stump the guest. >> i think boehner wants to be there. everyone agrees, but he is having a problem with his conference. there's no doubt about it, and this group of people who are willing to let us come to this point is very frustrating as a republican. i find it disturbing. i was one of those republicans who thought let's come to a grand bargain for our country's sake and politically. get it off the table for two years. let's move on. it made sense. >> instead, we went to plan "b" and so -- and other crazy scenarios. it was really bad. so is boehner's situation going to get any better in the 113th congress when we've got newer people? >> potentially. you will have a slightly more moderate, very slightly more moderate conference, and once he's re-elected, i think he will put up a vote even if it means not getting the majority of the majority and getting the democrats to put it up. >> it will get a vote and the reason he will is it's not tax increases, it's tax cuts. >> angela, what did you want to say? >> i don't think it will get

better for john boehner in the next congress. he's going to lose more republican seats. even if there is a more moderate bunch, there are fewer votes. i think at this point his party and the conference realizes they can stretch him a little tighter, and they can see that he's got a lot more work to do. boehner is going to have a tougher 113th congress without a doubt, and with this fiscal cliff deal, they're going to take it and stretch it to the very end. >> angela, you think republicans are sweating then because a few weeks ago they sounded like they could frame president obama as the bad guy. >> president obama is not the bad guy. you could see this love fest at the press conference this afternoon. american people totally understand and are supporting overwhelmingly what the president has proposed. they want tax cuts for the 98%, not for the top 2%. we've been at a standstill with plan "b" which never was a plan "b" to begin with because we're sacrificing the greater good for such a small minority.

>> jimmy and susan, i am going to ask you about the president's press conference and whether you thought it was a bad idea. but when angela was talking, susan, you were shaking your head when she said that the american people are behind the president. >> well, i think right now the american people are frustrated with washington, and that's where that's going to come down. yes, the president is better than the worst guy. boehner is the worst guy and the president is better than that, but that's not the standard you want to meet. you want to have a standard of we respect our government and we're going forward. so that's why i was shaking my head is right now it's like to be the best out of the three bad guys isn't that great. >> i just talked to three separate senate democratic offices and to a tee everyone said what the hell was the president doing at that press conference? democrats said this. they don't get where he was going with that. >> let me ask you this. i saw some comments on twitter from pundits saying that maybe the thing that was happening here is the president was trying

to quell what sounded like this morning a growing sort of frustration and resistance on the left to the deal that was emerging. is there -- isn't there some merit to that? >> i think that's possible, but i think you have -- take a look -- listen, i'm not concerned at all about house republican seats or house democratic seats. what i look at is who is up for re-election on the democratic side and the republican side in 2014. if you look at those democrats, the ones that aren't going to retire, they're vulnerable, every single one of them. they ought to be, every one of them, thrilled with what the president just did. >> that's not exactly true. it was maybe 10, 20 years ago, but there's only -- there used to be 100 swing seats out there for democrats -- >> not now. >> now it's 25. so you have these members who go back to their districts, and -- >> i'm talking about the senate. >> on the senate -- >> the house is irrelevant to this issue. >> from the american people's point of view they don't really care about 2014. they care about what's going to

happen in the few hours from now. >> angela, let me bring you in on this, the theory out there that what the president did today wasn't so much about clubbing republicans over the head as it was quelling growing resistance within the democratic party and on the pro -- within the progressive base to a deal that was emerging they thought was a bad deal from their perspective. >> right. i think that the president was trying, as always, to demonstrate leadership. he is the leader of the free world and has to demonstrate, listen, i know what you're feeling, i know what you're thinking, and i feel your pain. he is saying to these folks, we've had to compromise. we've had to give up some things that are very tough, and at this point we have to swallow this large pill and make a change for the american people. i don't think that he embarrassed himself by holding the press conference today. i don't think that in any way it was a bad move. i think he demonstrated not only by the group of folks standing behind him but from the response

almost from the audience that he's in the right. i don't think he's the best of the three worst guys. i think that he really was demonstrating leadership and we'll see with the deal. >> let's change gears and, jimmy, let me play you a mash up of some of the comments made about secretary clinton. >> i'm not a doctor, but it seems as though that the secretary of state has come down with a case of benghazi flu. >> this is a diplomatic illness to beat the band. >> charles, you had a good line, hillary has severe benghazi allergy. >> i have been doing a lot of work on that. that's the first reported case and it's a very, very severe one. >> very, very severe. let's see the medical report on that. >> unbelievable. now we know she is in the hospital spending new year's eve because of a blood clot that was discovered during routine short of checkup after her concussion. so, you know, john bolton called it a diplomatic illness. alan west, my favorite outgoing

member of congress, called it benghazi flu. so should we hold our breath awaiting an apology from these two characters? >> one would think. this is, after all, the former first lady of the united states. this is, after all, the former united states senator from the state of new york. this is, after all, the sitting secretary of state, which in the line of succession to the presidency is fifth in line if i'm not mistaken. i could be wrong on that. here is what i do know. you have john bolton, who by most accounts within the republican party, except for the neocons s a complete boob. you have alan west who lost a seat he should not have lost. why? because he's a moron. i just said it, new year's eve, alan west, is a moron and thank god he's leaving congress. these people should apologize. a fake news sham organization should apologies to secretary clinton and her family.

the woman is in serious medical shape and this is what they come up with? >> just -- >> she may be the president of the united states one day. what are they going to do then? >> two points, one, they should have never said it in the first place. she was very ill before she -- and fell as a result of her illness. second of all, republicans should just shut up about this. this is absolutely insane. the woman is ill. the only thing people should be saying is i hope she is well soon. >> think differently but say -- lie about it for god's sake. >> we have to stop saying something, thank you. >> happy new year. >> stay with us. as the clock continues to tick. sometimes what we suffer from is bigger than we think ... like the flu. with aches, fever and chills- the flu's a really big deal. so why treat it like it's a little cold? there's something that works differently

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it's new year's eve, but it's unlikely there will be much celebrating on capitol hill where nbc news is reporting there will not be a vote in the house tonight.

meaning the country will almost certainly go over the dreaded fiscal cliff when the clock strikes midnight. today president obama took one more opportunity to tell congress not to let that happen. >> part of the reason that i wanted to speak to all of you here today is to make sure that we emphasize to have congress and that members of both parties understand that all across america this is a pressing concern on people's minds. >> jared bernstein is an msnbc contributor and former chief economic adviser to vice president joe biden. jared, thank you for being here. >> thank you for inviting me, jonathan. >> take us through what happens if we do, indeed, go over the cliff tonight. >> well, if we go over the cliff and there isn't a new plan in the offing that could pass very quickly, and that's actually quite an if right now because they have been making some progress, then, you know, some bad stuff could happen when

financial markets reopen. they would take a spike down because they have largely priced in a solution. a very serious problem, millions of people would face what's called a hard cutoff of their unemployment benefits. if you're on extended unemployment insurance, meaning you're a long-term jobless person, you would lose those benefits, and, of course, if we go over and stay over, a bunch of tax increases kick in. that doesn't look like what's going to happen, jonathan, but that is certainly a plausible scenario. >> so those are the cold, hard numbers, but what do those numbers mean for the poor and middle class if we go off the cliff tonight? >> well, if we go off the cliff and we don't correct some of the damage i just mentioned, it's very serious for middle and low-income people. first of all, the payroll tax holiday ends, and that's going to happen whether we resolve this tonight, tomorrow, or a month from now because neither side is fighting for that. and that's a significant loss in

the paycheck. that's a 2% cut to the paycheck of working people. now, as i mentioned, if you're someone who has been on long-term unemployment, that means you've been unemployed for a bunch of months already, half a year or more, and so i can't imagine you have got much savings. you're depending on your unemployment insurance. that's a hard cutoff. you're gone if they don't extend that. now, in the plan that the vice president and senator mcconnell have been working on, apparently they have agreed to extend unemployment benefits for a year, but, of course, that plan doesn't sound like it's going to go anywhere tonight. >> well, let's talk a little arithmetic. what does a good deal have to look like in terms of spending cuts and new taxes and what kind of real gladollars are we talki about here? >> that's a really important question because there's really a big difference between a deal and a good deal. i mean, you can jam and cram through any kind of deal you want, but a good deal is one to my thinking that adds serious

balance to our longer term deficit reduction plans by putting some real revenue in the mix. ever since the president won the election, many of us who crunch these numbers have been looking for a revenue number in the neighborhood of $1 trillion over ten years. that's about what we thought this kind of threshold on income taxes of $250,000 would bring to the table. well, now they're talking about a much higher threshold, and the plan that the vp and senator mcconnell are hammering looks like it's providing $600 million. it's falling short of that metric. >> you sent out a tweet implying going over the cliff might not be a bad thing. if that's true, why all the hysteria. >> that's because if you go over the cliff and you quickly repair the kind of damage we were talking about in my first few comments, a couple things happen. first of all, you have a much

better chance, to my thinking, of getting that kind of revenue number that makes a lot more -- that adds a lot more balance to your longer term fiscal picture than the kind of plans i'm hearing kind of jammed out here in the last minute. and, secondly, the leverage really very much i think goes to the president and his side because at that point it really does look like the republican party has held 98% of households hostage in terms of their tax bill so they can protect the very narrow slice at the top. >> i can't let you go without asking you a question about your former boss, vice president joe biden. he's been in negotiations with senate minority leader mitch mcconnell. just a short time ago mcconnell suggested a deal on taxes may be very close. now, knowing biden as well as you do, take us inside that room. how is that conversation likely to go? >> you know, those guys have been negotiating and closing deals for a couple decades, and it's a very different kind of politics than i think we've

gotten used to over the last few years. i mean, joe biden used to say that this congress, it's not your grandfather's congress. by that i think what he meant was you could actually get in the room with another old-school partner and shake hands and have that handshake actually mean something, meaning your caucuses would be with you. you could craft a deal and actually have your troops marching behind you. that certainly wasn't the case with john boehner. so i think in that room they're probably bemoaning how hard they have to work to actually line up all these pieces to get their troops behind them and, frankly, they can't know whether those troops are going to be there, especially in the house. but that's probably the way they've been operating. >> jared bernstein, thank you very much for coming on. help new y help new year. >> same to you, jonathan. stay with us. ing. ring. progresso. i just served my mother-in-law your chicken noodle soup

everyone tells a little white lie now and then. but now she wants my recipe [ clears his throat ] [ softly ] she's right behind me isn't she? [ male announcer ] progresso. you gotta taste this soup.

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nbc news is reporting there will not be a vote in the house of representatives, meaning the u.s. economy will go over the fiscal cliff just as we ring in 2013 at midnight. nbc's kristin welker is live at the white house. kristin, let's get to the fiscal cliff in a moment. you've got some breaking news. >> reporter: i do. we have some breaking news on secretary clinton's health. as you know, he was admitted to the hospital due to a clot. of course, she had fainted a couple weeks ago and she's been recovering ever since. i'm going to read you this statement from her doctors. they say this is a clot in the vein that is situated in the space between the brain and the skull behind the right ear. it did not result in a stroke or neurological damage. to help dissolve this clot her medical team began treating the secretary with blood thinners. she will be released once the

medication dose has been established in all other aspects of her recovery. the secretary is making excellent progress and we are confident she will make a full recovery. she is in good spirits engaging with her doctors, her family, and her staff. so, again, those are from her doctors who are treating her in new york, and really the bottom line there is that she is expected to make a full recovery. a lot of people concerned about secretary clinton's health, of course. a lot of people tuned in to what's happening with her. so again, just to recap what they're saying, that clot is situated between her brain and skull sort of behind her right ear. they are treating her with blood thinners but they expect her to make a full recovery and the fact she's jovial as they describe her is certainly good news. >> that is good news. kristin, do we know anything about the president, his reaction? has he been monitoring her progress in all this? >> reporter: the white house has been monitoring her progress

throughout this entire episode hoping she makes a full recovery as quickly as possible. because this information is just coming into us, there hasn't been a reaction from the white house at this point, and they're really referring all these questions to the state department, which is really helping us to navigate how she's doing and how her recovery is going. again, the bottom line is that she is expected to make a full recovery. of course, a lot of people, including the white house, concerned last night when she was admitted to the hospital due to this blood clot, and so, again, there is some good news in that she's expected to recover. >> turning back to the fiscal cliff, just this hour we have reports of republicans claiming the president is holding up talks over the sequester. now we have senator mitch mcconnell and the president saying they want a deal on taxes first before dealing with the sequester. what's going on down there? >> reporter: well, there's this final sticking point of the sequester. they have agreed to this tax deal, which is not

insignificant, of course. this tax deal which will increase taxes on individuals making $400,000 or more and couples making $450,000 or more because, remember, some republicans have been resistant to raise taxes at all. the hangup over the sequester is that the white house is saying, democrats are saying let's extend it, stave it off for a year, and pay for it with new tax revenues. republicans say, no, let's deal with it in the nearer future. that's really where the fight is coming together, but these negotiations continue to evolve and my sources tell me they're still optimistic for a deal. >> kristin welker, thank you. happy new year. >> reporter: and to you. >> thanks for watching. more live coverage on the fiscal cliff crisis is coming up next.